Cloud ERP Acceptance on Upswing

While ERP has been moving more slowly to the cloud than other enterprise apps, recent research shows a growing number of companies plan to use cloud for future ERP deployments.

ERP is beginning to experience a shift that has already shaped other enterprise applications like CRM, according to a new survey from Epicor Software, with respondents indicating a desire for cloud ERP solutions.

There is a clear ERP capability gap, according to a CIO Insight slideshow that highlights key points of the survey. While 80 percent of respondents said ERP was critical to their business, half reported that performance of their current system was "basic" or "adequate." Not exactly a strong vote of confidence.

A majority are looking to the cloud for future ERP deployments, with 64 percent of respondents saying they favor cloud and just one in five indicating they plan to keep investing in on-premise ERP. This mirrors the results of a Gartner report released earlier this year that found nearly half of enterprises plan to move their core ERP systems to the cloud within five years.

This trend appears to be finally moving to the front burner after years of interest. While cloud has become the dominant deployment model for enterprise apps like CRM, organizations have been a bit more reluctant to move ERP to the cloud due to the business-critical nature of ERP and a desire to wring all the value they could get out of hefty investments in their on-premise ERP systems.

What Is Behind Cloud ERP Momentum?

Experts like IT consulting company MintJutras report that two-tier ERP deployments, in which companies maintain some ERP functions on-premise while migrating others to the cloud, have helped clear the way for more extensive cloud ERP deployments.

While giants like Oracle, SAP and Microsoft were slow to offer cloud ERP, perhaps because of concern it could cannibalize their on-premise ERP solutions, they are now clearly on board with the cloud ERP trend. Oracle, for instance, has introduced a program called Customer 2 Cloud that is designed to help companies with cloud migrations.

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The cloud hits a sweet spot for the areas that respondents to the Epicor survey tapped as their top criteria for future ERP investments: faster response time, enhanced performance, ease of deployment and scalability. These are things that providers of cloud software have preached about for years – and that many companies have experienced with their prior cloud initiatives.

10 Questions for Cloud ERP Buyers

That said, there is an important caveat for cloud ERP: Companies should not see it as a panacea for all of their ERP ills. As with any ERP initiative, companies must first carefully consider how they capture and manage data and look at ways to streamline and transform their workflows. They must also make provisions for change management and employee training.

Adam Stern, CEO of cloud service provider Infinitely Virtual, in an earlier interview with Enterprise Apps Today, said, "Companies must give their employees a thorough grounding in the system – not simply how it works at a high level, but what it means to the organization and why their active support is essential both to their success and to the profitability of business."

Experts, including Stern, offered some cloud ERP buying tips in the same article. Among questions prospective cloud ERP buyers should ask:

Is the underlying ERP architecture based on cloud industry standards like Java and SOAP-based Web services?

Are configuration and customization tools available to change the generic functionality of the ERP system?

What are the costs, including potentially overlooked ones like training, associated with moving ERP to the cloud?

How does the cloud ERP vendor guarantee uptime in its service level agreements (SLAs)? What are the average uptimes for its customers?

How does the cloud ERP vendor provide visibility into performance?

How does the cloud ERP system satisfy relevant security and compliance requirements? Does the vendor have any certifications to help illustrate its ability to do so?

Can cloud ERP data be accessed and moved at any time? How is this done?

Who "owns" the cloud ERP data?

How easy are cloud ERP upgrades and how exactly do they occur?

How, if at all, will using cloud ERP affect other software systems?

Ann All is the editor of Enterprise Apps Today and eSecurity Planet. She has covered business and technology for more than a decade, writing about everything from business intelligence to virtualization.

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